Photograph by: Calgary Herald
, edmontonjournal.com

EDMONTON — Despite repeated assurances from Alberta Health Services that amalgamating the former nine health regions into one would save millions in administrative costs, those savings haven’t yet been achieved and should spur taxpayers to demand more detailed information, says Liberal MLA Hugh MacDonald.

Yet even though administrative costs are projected to sit at $354 million in 2010-11 — an $83 million increase from 2006-07 when the health regions and the cancer and mental health boards were still in existence — the chief financial officer of Alberta’s health superboard said money has been saved and costs will continue to go down.

“My belief is by doing this merger from an administration perspective we can be probably the best in the country, both in terms of service delivery to the front-line care providers as well as from a cost effectiveness perspective,” said Chris Mazurkewich, who works in finance with Alberta Health Services. “I believe firmly that’s what we can achieve and that’s our intent to achieve that. That’s what we’re working hard on.”

In 2006-07, the nine former health regions plus cancer and mental health boards spent $271 million on administration, such as payroll or human resources, finance, legal and privacy costs, and patient safety and risk management. That went up to $297 million in 2007-08 (still under the former health boards) and jumped to $344 in 2008-09. In May 2008, the province abolished the health regions and set up an interim board and CEO for Alberta Health Services.

At the time, Premier Ed Stelmach said Albertans wanted the government to slash administrative costs. He said then-health minister Ron Liepert would “be coming forward with plans to look at, again, channelling as much money, move as much money out of administration into health-care delivery.”

The first full fiscal year with that new health authority in charge saw administration costs rise to $390 million, an increase of $46 million — or 13 per cent — over one year.

“Financial statements really tell the truth and the fact is here, going to the one board has not reduced administrative costs,” said MacDonald, finance critic for the Alberta Liberals.

“I just consider this to be another example of how this consolidation has not worked in the interests of taxpayers nor of health-care patients in this province. We were promised that this would reduce administrative costs and it has not. That’s what you get when you take a $9 billion budget and make radical changes to it without a plan and that’s unfortunately what occurred. There was never a cost-benefit analysis done to see if this would work.”

Mazurkewich said the administrative costs rose the first year under the new super health board because of one-time transition costs. Some departments such as finance were “rightsized,” he said, with more than 100 positions eliminated. While some of those employees were moved to other jobs, others required severances that totalled $13 million in 2009-10. Another $40 million was spent between 2008 and 2010 to top up pensions of employees who moved from one program to another during the restructuring.

With those paid, Mazurkewich said administrative costs are expected to go down to $354 million in 2010-11 and will do so again the following year.

“The forecast for this year is already on the decline,” he said, adding that the number of employees in the role of vice-president or more senior positions is 61 fewer now than under the health regions — 77 instead of 144, with six positions vacant — meaning a 42 per cent decrease in senior management and $11.5 million in savings.

The total administration tallies won’t likely dip below that spent under the former health regions partly because of wage increases to office staff and rising insurance costs. Alberta’s health superboard is also pouring more cash into patient quality and safety and the people who train clinical staff on those issues.

“If we’re successful in those investments, and we get the outcomes that we anticipate, we will see safer service, higher quality of service being delivered to patients,” Mazurkewich said. “That’s part of the investment we make ourselves, directed to patient care. … That’s what the game plan is.”

This next fiscal year could see more layoffs in the payroll departments as Mazurkewich’s team begins the largest merger of 13 to 14 payroll systems into one. That’s a huge technological feat beginning February with completion targeted for December 2012.

Mazurkewich wouldn’t say how many people may lose their jobs.

“As you know, that creates a lot of uncertainty and nervousness and we want to do this in a manner that’s fair for our employees,” he said. “We’re doing one of the most complicated mergers done in the country.”

Overall, the health system has saved more than $600 million in the last year, of which $168 million is in administration, Mazurkewich said.

MacDonald said he would like more information released publicly, such as a breakdown on how much each of the new five health zones spends in every area, such as administration or acute-care. The health region is only required to report one amalgamated number to the public with no geographical breakdown.

“You have no idea where in this province they are spending the money. That’s a real problem under this new health board,” MacDonald said. “Taxpayers on a $10-billion plus line item in the budget, they deserve a breakdown and they deserve an explanation on why and where their health-care dollars are being sent. It’s a reasonable thing to expect from your government.”

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